Critical condition: industry must stop the spread of unfair health care reform

Nation's Restaurant News,  April 9, 2007  by Jot Condie

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This is the first in a four-part series on health care.

Voters still are recovering from the last election, and already more than a dozen candidates are climbing into the 2008 presidential ring. Campaign speeches, vague promises and character assassination begin to fill the air.

So why should the restaurant industry care this early in the game?

A growing anti-business movement is in high gear, with an ever-increasing number of policies hostile to business finding their way into state legislatures and onto Election Day ballots.

Already, health care reform has emerged as a premier domestic issue. Presidential aspirants have made it a top priority in their campaigns, and legislators and activists have continued to highlight access and costs of health care.

How serious is this issue to restaurateurs? The California Restaurant Association has been engaged in the fight over health care reform for nearly five years. In 2003, the state Assembly passed aggressive legislation to require all employers in the state with 20 or more employees to provide full medical insurance for their employees.

The costs of this measure would have been staggering--a $7 billion annual tax on employers, schools, local government and charities to create a government-run state health care system. Thousands of Californians would have lost their jobs. We predicted the employer requirement would have driven about 20 percent of our members out of business.

We formed a coalition called Californians Against Government Run Health care to overturn this measure, labeled Proposition 72. While the CRA was an opponent of the measure, our opposition was not to universal health care, but to the idea that employers should bear most of the costs to fund a societal goal that would benefit all Californians, working or not.

It was a hard-fought battle that came down to the wire: an enormous effort in dollars and labor between the signature-gathering process, countless legal battles, the air war on television and boots on the ground. By the fall we were armed with a sizable war chest, a compelling message and virtually every major newspaper editorial board in our corner.

Ultimately, we were able to convince voters after they learned about the damaging impacts of the initiative. On Election Day, we very narrowly defeated the measure. The cost for maintaining the status quo? Forty million dollars. We raised and spent about half of that. Proponents of Proposition 72 accounted for the other half.

In the following years, Proposition 72-style proposals became the centerpiece of the debate on health care. Today, we are seeing multiple legislative proposals and activist-driven efforts to put employer mandated health care on the ballot in multiple states.

Some would have you believe that there are good employers who offer health care and bad employers who do not. In reality, it is the double-digit increases in health care premiums that divide California employers into those who can afford the out-of-control costs and those who cannot.

Last January, Gov. Arnold Schwarzenegger announced a new plan for California that includes a mandate requiring employers to spend up to 4 percent of their payrolls on health care. Other California legislators have proposed similar legislation, bringing the number of proposals to six.

Four of the legislative plans so far have an employer mandate, yet don't address the true problem: cost.

They all speak of shared responsibility, but most contain burdensome employer mandates targeting California small businesses. A disproportionate burden will fall on small, labor-intensive businesses in low-margin, entry-level wage industries such as restaurants, compared with high-margin, very profitable businesses such as law firms. The more employees a business has relative to income, the greater the economic burden becomes when measured as a percentage of payroll. The greatest sacrifice will come from those businesses least able to pay.

Fifteen additional state legislatures have introduced bills calling for employer mandates to provide health insurance. If passed, you may have no choice but to cut labor costs by reducing employee hours, overtime or eliminating other benefits. Worst of all, you may have to eliminate jobs.

States that don't pass these harmful measures legislatively can expect to find activist-driven efforts to mandate health care coverage through the ballot initiative process. Like the 2006 wage hike initiatives, these measures often include fine print that would be confusing to voters wading through a cluttered ballot.

What can you do?

First, become engaged and educated. Damaging new health care mandates are surfacing in states every day. By getting involved in your state restaurant association or a well-organized and politically influential business association, you can impact the debate. Because if the health care debate goes to the ballot box, organization, discipline and a lot of fundraising is the only way to prevail.